Harvard University’s Kennedy School carried out a live simulation of a White House National Security Council meeting on Nov. 19, featuring former senior administration officials and thought leaders. The “Digital Currency Wars” event examined a potential future scenario, following a North Korean missile test, potentially enabled by China’s proposed digital yuan.
If economic sanctions fail, how will the U.S. wield power?
The simulation was set two years in the future, with China’s digital yuan having theoretically been launched 20 months previously. The digital yuan has risen to not only dominate the Chinese domestic payments space, but its ease of use and the Belt and Road Initiative is seeing adoption spread across South East Asia.
The game includes a newsflash of a North Korean missile test, more advanced than Washington had believed, and thought to have been funded through U.S. sanction avoidance via the use of the digital yuan.
With sanctions failing, the Security Council meeting discussed options to put to the president.
United States becomes reliant on Chinese cooperation
One of the key points put forward was that the U.S. would at this point be reliant on the Chinese. The simulated Treasury Secretary pointed out:
“We will not successfully starve North Korea economically without the cooperation of China, and certainly not if it is their objective to see us fail.”
He also pointed out the 30 years of history in which the U.S. had not been successful in persuading China to use its leverage.
The meeting was interrupted mid-way through with another newsflash, this time revealing that the SWIFT system had been cyber-attacked and $3 billion stolen from commercial banks in Germany, Saudi Arabia, and the United Arab Emirates.
An interesting thought experiment
The eventual recommendations which the group decided to put forward to the president hinged on measures attempting to prevent a bifurcation of the global economy.
The weaponization of SWIFT was proving less…